PT Indosat Tbk FY 2014 Results · 2015-11-12 · Indosat Presentation FY 2014 Results 4 4Q14 QoQ Overview Consolidated Revenue increased 4.3% to IDR 6,368 billion EBITDA decreased

PT Indosat Tbk FY 2014 Results

2 Indosat Presentation FY 2014 Results

Agenda

Financial and Operational Highlights

Management Focus and Key Updates

Supplemental Information

3

Financial and Operational Highlights


4Q14 QoQ Overview

Consolidated Revenue increased 4.3% to IDR 6,368 billion

EBITDA decreased 4.3% to IDR 2,459 billion, EBITDA Margin reached 38.6%

Loss Attributable to Owners of The Company increased to a loss of IDR 664 billion

Free Cash Flow decreased to IDR -206 billion


FY14 YoY Overview

Consolidated Revenue increased 1.0% to IDR 24,085 billion

EBITDA decreased 3.1% to IDR 10,059 billion, EBITDA Margin reached to 41.8%

Loss Attributable to Owners of The Company decreased to loss IDR 1,987 billion

Free Cash Flow increased to IDR 2,345 billion


Financial Highlights

Operating Revenue

EBITDA

EBITDA Margin

Profit /Loss Attributable to Owners of the Company

24,085

FY-13 FY-14 YoY

1.0%

10,059 -3.1%

41.8% -1.7ppt

-1,987 28.6%

6,368

3Q-14 4Q-14 QoQ

4.3%

2,459 -4.3%

38.6% -3.5ppt

-664 -215.3%

in IDR billion

• Continued strong momentum on QoQ revenue growth. • EBITDA margin pressures due to higher operational costs related to network expansions.

23,855

10,376

43.5%

-2,782

6,104

2,569

42.1%

-211


833 833 861 845 887 916

350 328 261 281 292 262

Segment Revenue Overview

Operating Revenue Breakdown

in IDR billion

2Q-14

+4.3% QoQ +5.1% YoY

3Q-14

5,840 5,773

1Q-14 4Q-13 3Q-13

Cellular

Fixed Data

Fixed Voice

-10.2% / -20.1%

+3.3% / +10.0%

+5.4% / +6.0%

• Cellular revenue continued its momentum in 4Q14 driven by network modernization. • Continued strong demand for fixed data services and connectivity.

QoQ / YoY 6,091 6,056

4,895 4,908 4,714 4,651 4,925

6,104

4Q-14

5,190

6,368


Cellular revenue performance

Voice

SMS

Data

VAS

-5.0%

4Q14 YoY

-9.0%

63.9%

50.9%

0.4%

4Q14 QoQ

-6.3%

25.0%

-0.5% Various Gaming & Content packages pushed number of VAS user

Migration to data continued to impact voice usage which SMS usage was impacted the most

Increase data usage as respond to attractive data offer


53.8 59.6 59.7

54.9 54.2

63.2

Cellular customer base

3Q-14

+6.1% YoY +16.6% QoQ

2Q-14 1Q-14 4Q-13 3Q-13

Number of cellular customers

in million

3Q-14 2Q-14 1Q-14 4Q-13 3Q-13

in million

• Aggressive customer acquisition campaigns during 4Q to leverage improved network quality perception

-2.7

5.8

0.1

-4.8

-0.7

9.0

4Q-14 4Q-14


96 89

79 80 78 78 133 137 140 143 148 142

15.6 14.8 13.5 13.6 13.1 13.6

ARPU stable

Voice traffic and MOU

-8.2% YoY

3Q-14

+4.1% QoQ

2Q-14 1Q-14 4Q-13 3Q-13

Voice Traffic

in billion minutes (Voice Traffic) in minute/subscriber (MOU)

MOU

• ARPU stable despite significant increase in number of customers. Quality customers remained intact

ARPU and ARPM

28.5 27.7 25.8 26.6 28.3 28.0

2Q-14 1Q-14 4Q-13 3Q-13

-1.0% QoQ +1.2% YoY

3Q-14

ARPU

in thousand IDR (ARPU) in IDR (ARPM)

ARPM

4Q-14 4Q-14


71 67 60

61 57 59

6,485

12,871 15,372

19,185 20,911

29,891

Strong data usage

Data usage

in TByte

+42.9% QoQ +132.2% YoY

3Q-14 2Q-14 1Q-14 4Q-13 3Q-13

SMS delivered

in billion

-12.2% YoY

3Q-14 2Q-14

+2.7% QoQ

1Q-14 4Q-13 3Q-13

• Modernized network resulted in better data experience pushed data revenue growth

4Q-14 4Q-14


Operational expenses

Cost of Service (CoS)

Depreciation and Amortization

Personnel

Marketing

as percentage of revenue

General and Administration

Total Expenses

• Higher Cost of Services due to expanding network • Increased go-to-market expenses and escalated network quality perception

Total Operating Expenses

4Q-13 3Q-13

41.7%

37.8%

6.8%

4.2%

3.7%

94.2%

56.4%

42.4%

38.9%

8.7%

4.0%

5.1%

99.1%

60.2%

1Q-14

41.4%

34.4%

7.2%

2.8%

3.4%

89.2%

54.8%

2Q-14

43.4%

33.6%

7.3%

3.6%

4.1%

116.7%

58.5%

3Q-14

42.7%

33.4%

7.4%

4.9%

3.0%

91.3%

57.9%

Provision for IM2 Legal Case 23.5%

4Q-14

45.2%

35.1%

6.6%

5.9%

3.8%

96.5%

61.4%


2,655 2,410

2,611 2,421 2,569 2,459

EBITDA Performance

EBITDA and EBITDA margin

-4.3% QoQ +2.0% YoY

3Q-14 2Q-14 1Q-14 4Q-13 3Q-13

EBITDA

in IDR billion

43.6%

EBITDA Margin

• FY14 EBITDA margin in line with guidance • A lag between revenue generation and

operational cost disbursement after network expansion impacted EBITDA result

39.8%

45.2% 41.5% 42.1%

38.6%

4Q-14


Normalized net loss bridge

375

-2,782

-1,987 -1,987

-123

Normalized net profit*

Net profit

-28.6% YoY -841.7% YoY

FY-14 FY-13 FY-12

in IDR billion in IDR billion FY-14

• FY2014 net loss impacted mainly by IM2 provision

Normalized Net–

FX Loss

Reported

* Net profit is Profit Attribution to Owners of the Company

Change in

Useful Life

Sale

TBIG

Shares

547

373 414

1,359

Provision

IM2 Legal

Contingency


2.43 2.70

2.72

25,598 28,052 27,346

2.06

2.49 2.37

21,680 25,819 23,866

Balance sheet

Gross debt* and gross debt/EBITDA Net debt* and net debt/EBITDA

FY-13 FY-12 FY-14

-2.5% YoY

Gross Debt

in IDR billion

Gross Debt/EBITDA

FY-14 FY-12 FY-13

-7.6% YoY

Net Debt Net Debt/EBITDA

in IDR billion

• Slightly lower debt level YoY despite Rupiah depreciation

* IDR 3.6tn and IDR 3.6tn of obligation under finance lease are included in FY13 and FY14 respectively


41.3

24.0 27.5 28.6

25.7 25.4 2,516

1,452 1,590 1,669 1,566 1,618

Free Cash Flow & Capex

Free cash flow

in IDR billion

479

-1,045

1,319 876

356

-206

3Q-14 2Q-14 1Q-14 4Q-13 3Q-13

Capex and Capex/Revenue

3Q-14 2Q-14 1Q-14 4Q-13 3Q-13

Capex

in IDR billion

Capex/Revenue

• Positive free cash flow generated in FY2014 • 4Q14 negative free cash flow due to higher payment to suppliers

4Q-14

4Q-14


846 767 798

484 442 425

Network Development

Number of BTS

18,214 18,871 19,892 20,585 21,420 22,166

4,993 5,409 6,363

13,328 15,962

18,063

+7.6 QoQ +65.7% YoY

3Q-14 2Q-14 1Q-14 4Q-13 3Q-13

2G 3G

Cellular Revenue per BTS

In IDR million

FY 2014 FY 2013

XL

Indosat

Telkomsel

• Network modernization completed for key cities in Indonesia • Completing network modernization for surrounding cities in Mid-2015

23,207 24,280 26,255

33,913 37,382

4Q-14

40,229


Q4 in summary

Management Focus and Key Updates


Develop adjacent and new businesses

Increase cost efficiencies to enable investments for growth

Improve monetization of the strong growth in data users and traffic

Leverage modernized network and improved customer experience to drive revenue growth

Our Focus


2015 Guidance

FY 2014 Actual FY 2015 Guidance

Consolidated Revenue Growth 1.0% In line with market

EBITDA Margin 41.8% Low to Mid 40’s

Cash CAPEX IDR 6.4 trillion IDR 6.5 - 7.5 trillion


Thank You

Any further questions?

Upcoming events 1Q - 2015 Results

Indosat Investor Relations Jl. Medan Merdeka Barat No. 21 Jakarta - 10110 Tel: +62 21 30442615 [email protected]


Disclaimer

• PT Indosat Tbk ( “Indosat” or “Company” ) cautions investors that certain statements contained in this document state its management's intentions, hopes, beliefs, expectations, or predictions of the future are forward-looking statements

• The Company wishes to caution the reader that forward-looking statements are not historical facts and are only estimates or predictions. Actual results may differ materially from those projected as a result of risks and uncertainties including, but not limited to:

• The Company’s ability to manage domestic and international growth and maintain a high level of customer service

• Future sales growth

• Market acceptance of the Company’s product and service offerings

• The Company’s ability to secure adequate financing or equity capital to fund our operations

• Network expansion

• Performance of the Company’s network and equipment

• The Company’s ability to enter into strategic alliances or transactions

• Cooperation of incumbent local exchange carriers in provisioning lines and interconnecting our equipment

• Regulatory approval processes

• Changes in technology

• Price competition

• Other market conditions and associated risks

• The company undertakes no obligation to update publicly any forward-looking statements, whether as a result of future events, new information, or otherwise

• Please be also advised that the information provided herein are merely issued to coincide with the release of Ooredoo QSC (formerly known as Qatar Telecom QSC) results for the year ended 31 December 2013, as the Company’s indirect majority shareholder that consolidates Indosat’s results in its financial statements. Subject to the completion of, including but not limited to the audit by the Public Accountant Firm on the Company’s consolidated financial statements which are prepared in accordance with the Indonesian Financial Accounting Standards (IFAS), Indosat expects to file and release its consolidated financial statements for the year ended 31 December 2013 on 30 April 2014 at the latest (“Indosat’s Official Release”). Accordingly, the information provided herein may differ from what is contained in Indosat's Official Release.

Supplemental Information


IM2 case development

On September 16, 2014, the South Jakarta Attorney Office (“Kejaksaan

Negeri Jakarta Selatan”), without preliminary notification, executed the

Supreme Court’s Decision on Mr. Indar Atmanto. The execution was done

based on a quotation of the Supreme Court’s Decision, which states, among

others, that (i) Mr. Indar Atmanto is found guilty and sentenced to eight

years imprisonment and charged with penalty of Rp300,000,000,- (if the

penalty is not paid, Mr. Indar Atmanto would serve an additional six months

imprisonment), and (ii) IM2 pay the losses sustained by the State amounting

to Rp1,358,343,346,674,-.

Subsequently, on January 16, 2015, Mr.Indar Atmanto and/or his lawyer or

IM2 received the document on the Supreme Court’s decision regarding the

litigation case. As of the issuance date of the consolidated financial

statements, Mr. Indar Atmanto and IM2 plan to conduct further legal act by

submitting a reconsideration request peninjauan kembali (”PK”).

In conjunction with the Supreme Court’s decision on the litigation case, the

Company recognized a provision for the litigation case amounting to

Rp1,358,643,346,674,- (including the penalty imposed on Mr. Indar

Atmanto) in the consolidated financial statements of the Group as of

December 31, 2014.


Credit ratings improved Upgrade to AAA by Pefindo

On 7 January 2015, Standard and Poor’s (“S&P”) has affirmed its rating and outlook on Indosat (BB+/Stable/NR; axBBB+/--). The stable outlook reflects the outlook on the sovereign credit rating on Indonesia (BB+/Stable/B; axBBB+/axA-2). S&P expects Indosat's operating performance to remain stable over the next two years, given the company's focus on the data business. S&P assess Indosat's liquidity as "adequate" because the company's sources of liquidity are likely to cover its needs by more than 1.2x in the 12 months to Sept. 30, 2015.

On 5 November 2014, PEFINDO has raised its ratings for Indosat and its Bonds V/2007 Serie B, Bonds VI/2008 Serie B, Bonds VII/2009 Serie B, and Bonds VIII/2012 to “idAAA” from “idAA+”. PEFINDO has also raised its ratings for ISAT’s Sukuk Ijarah IV/2009 Serie B and Sukuk Ijarah V/2012 to “idAAA(sy)” from “idAA+(sy)”. The outlook for the corporate rating is “stable”. PEFINDO has also assigned “idAAA” and “idAAA(sy)” ratings for the proposed IDR9 trillion Shelf Registration Bond I/2014-2016 and IDR1 trillion Sukuk Ijarah I/2014-2016 of Indosat respectively.

On 13 February 2015, Moody's Investors Service says that for the nine months ended September

2014, Indosat's results were weaker than expected but can be accommodated within its Ba1 rating

with a stable outlook.

On 2 April 2014: Fitch Ratings has affirmed Indosat Long-Term Foreign and Local-Currency Issuer Default Ratings (IDR) at 'BBB'. The agency has also affirmed the Indonesia-based Indosat's National Long-Term Rating at 'AAA(idn)'. The Outlook is Stable on the IDR and the National Long-Term Rating. Fitch has also affirmed the foreign-currency senior unsecured rating of 'BBB'. On 5 September 2014 Fitch has reaffirmed the Indonesia-based Indosat's unsecured National Long-Term Rating at 'AAA(idn)‘ and the upcoming National Long-Term Ratings on its IDR9trn bond programme and IDR1trn sukuk ijarah programme at “AAA(idn)‟.


Debt maturity profile

Debt maturity profile*

In IDR trillion

2019 2018 2022 2017 2016 2015

IDR

USD in IDR

* Excluding obligation under capital lease

2021

8.95

0.77 0.49 0.25 0.25

2.92

1.67 2.98 0.50 2.27

0.36 1.50 0.36

2024


Spectrum overview for top 4 cellular operators

10.0

900 Mhz

7.5

7.5

Indosat

Telkomsel

XL Axiata

20.0

1800 Mhz

22.5

22.5

10.0

2100 Mhz

15.0

15.0

in Mhz

Hutchison - 10.0 10.0

2.5

850 Mhz

3.5 – 5.0*

-

-

* Telkom and Bakrie Telekom have the same spectrum, differentiated by its operational areas

15.0**

2300 Mhz

15.0**

-

-

** Indosat/IM2: West Java exclude Bogor, Depok & Bekasi ; Telkom/Telkomsel: Maluku & North Maluku

Documents

PT Indosat Tbk FY 2014 Results · 2015-11-12 · Indosat Presentation FY 2014 Results 4 4Q14 QoQ Overview Consolidated Revenue increased 4.3% to IDR 6,368 billion EBITDA decreased